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Forensic Accounting 101 on the front page of the NYT
July 6th, 2005 by JTJ

One
of the foundational cross-over disciplines we think are of value to
journalists is Forensic Accounting, at least that's the term used when
applied in business.  (It's “performance measurement” when talking
about government.)




One of
the basic measurements in forensic accounting is to compare the percent
of dollar distribution by type or sector in one instution to the
percent of dollar distribution in a comparable institution.  So it
is that we were please to see Glen Justice dipping into the forensic
accountants toolbox in Wednesday's NYTimes in his story “
For a Lobbyist, Seat of Power Came With a Plate.”  The story is about how lobbyist, and Tom Delay pal, Jack Abramoff apparently used his own restaurant in Washington, Signatures, as a place to meet and greet legislators.  He just forgot to give them a check.



Justice wrote:

…While Signatures was popular, it struggled to make money, according to employees and documents.

'Mr. Abramoff and his companies invested more than $3 million in
Signatures from January 2002 to May 2003, records show. At the same
time, he and his employees gave away tens of thousands of dollars in
food, wine and liquor, the records show. That includes menu prices for
Mr. Abramoff's own food and drink, as well as employee discounts and
free meals given by restaurant managers and staff, according to the
records. Nationwide, the median expense for marketing, including free
meals and drinks, was about 3.5 percent of sales for expensive
restaurants like Signatures that spend the most on such promotions,
according to the National Restaurant Association. One national
restaurant consultant, Clark Wolf, said the figure can go as high as 5
percent.

'At Signatures, free meals and drinks for managers and guests alone
were about 7 percent of revenues for the restaurant's first 17 months,
according to former employees and financial records. Mr. Blum, the
spokesman for Mr. Abramoff, disputed that percentage.”

Seems
like pretty basic reporting, but more reporters would do well to make
that one more call if they want to establish context in their stories.






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